Credit Card Basics for the First Time Cardholder

Getting the right information is important before acquiring your first credit card. This article is especially written for students and for others who are planning to acquire a credit card for the first time. Knowing these basic facts can save you from unpleasant surprises later on.

Credit cards vary. Not all credit cards are the same. Some are especially designed for people with good credit while others are intended for people who need to repair their bad credit. Some credit cards offer rewards while others do not.

When it comes to reward credit cards, programs also vary depending on the type of reward it offers. The most popular reward credit cards that you may come across are cash back, airline miles, and gas rewards. When in search for a credit card, don’t just make a decision based on how attractive the deal is. Consider carefully if the credit card complements your lifestyle and needs.

A low rate is better. When comparing credit cards, you’ll want to look for the one with the most reasonable rate of interest. Although you can avoid interest rate charges by paying your monthly balance in full, a low rate card is always the safest choice.

Credit card features are important. Aside from the interest rate, you’ll also want to evaluate the specific features and services of a credit card. Will you be able to pay your charges online or over the phone?

Online and telephone banking are special provisions that you can use to avoid late payments. Can you rely on reliable support at any time? Remember, the features will vary from one card to another so you’ll want to find the one that will help you maintain good credit.

Fees can be a burden. A credit card may boast of a low rate but if it carries expensive fees for different transactions, then it can be a burden. For instance, how much do you need to pay every year to keep your account active?

Some credit cards carry very expensive annual fees ranging from $80 to as much as $100 or higher. Late penalty fees, over-the-limit fees, and balance transfer fees are just some of the costs you should watch out.

Build credit with your student credit card. One of the most important benefits you can enjoy from using a student credit card is the opportunity to establish early credit history and maintain your good credit standing.

But this can only be possible if your student credit card accurately reports your payments to the three major credit bureaus (Experian, Equifax, TransUnion). Remember, not all student credit cards offer credit reporting. When doing comparison, you should be very particular about this provision.

Know the Credit CARD Law. Certain provisions in the Credit CARD law can protect you from bad credit. However, you need to be aware of your rights and limitations as a cardholder.

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